The incidence of fungal infection has been steadily increasing among immunosuppressed and cancer patients. For this reason, there is a need for an effective, non-toxic water soluble antifungal agent. The objective of this research is to prepare and characterize the novel antifungal antibiotic hydroheptin, which is a member of the non-aromatic heptaene macrolide group and is reported to be water soluble. The specific aims in the first phase of the work will be: 1. Evaluation of various cultures and characterization of the best hydroheptin producers, 2. Development of analytical HPLC assay method for quantitation, 3. Development of fermentation conditions, 4. Scale-up of the fermentation to pilot scale, 5. Development of an efficient isolation/purification method, 6. Preparation of sufficient material for biological and physicochemical studies. Strain improvement, structural characterization, chemical modifications and extended antifungal activity evaluation will be performed in the second phase of development. Information, that imparts water solubility to hydroheptin, may be translated into other polyene macrolides for improvement of water solubility and antifungal activity.